Is a Recession Inevitable?

“Until you make the unconscious conscious, it will direct your life and you will call it fate.“

-Carl Jung

The View from 30,000 feet

Economic reports and corporate data last week highlighted the cautious stance of corporations, contrasted against a resilient consumer, who continues to be propped up by strong demand in the labor market and increasing wages. With 53% of the S&P500 having reported, the message from companies is widely better than expected, as companies have been able to hold onto the topline at the expense of volumes. Market reactions to earnings however are less sanguine, as nervous investors have been quick to punish bad news and less willing to reward good news. The backdrop of high valuations, the availability of a reasonably yielding risk-free rate as an alternative, concerns about a pending debt ceiling crisis, and a chorus of data and news stories pointing to the potential of a recession, is keeping positioning bearish and capping attempts for a handoff to positive momentum.

GDP, Fed Regional Survey data, and Durable Goods Orders combine to tell the story of tentative corporate spending attitudes.